Also, the technique requirement of the industry is high. Moreover, mining companies has a high exit cost and that because the use of specialized asset. The capital expenditure or set up of mining company is very high. Resources of coal and uranium are laminated. The reason for this is the government regulations and restriction on coal and uranium mining companies. The threat of entry for the coal and uranium industry tends to be low due to high entry barriers. 4 Threat of new entrants: New entrants may pose a threat to the company by introducing new innovative products at a competitive prices and eating into their market share and customer loyalty. Thus, the competition in the industry is concluded as medium to high. Companies in the industry might battle for larger market share but facing little threat of new entries. However, since the exit barriers are high, the competition is limited within the existing companies. Also, there are many competitors in the industry. Since the resources are limited and unrenewable, together with the continues increasing demand for energy, such as coal demand of China and India, the battle of exploiting and developing new mines are intensive.
One major competition for mining industry is the competition for resources and mines, which is different from other industries. 3 Rivalry among existing firms: The competition of mining industry is medium to high. Since mining equipment has limited market, the suppliers may also have other product, such as construction equipment, which makes their powers high. On the other hand, equipment suppliers usually have cross industry business. When the switching cost is high, the mining companies may find it hard to play suppliers off against one another. Harvard Business Review.While the price of mining equipment is high, the mining companies might also need the suppliers’ technical support in maintaining and upgrading the equipments after purchasing them. New entrants could find it very hard to compete and gain economies of scale and market share against major brand players in this industry. In conclusion, competitive rivalry is very high for mobile phones, with major brand competitors such as Samsung, Apple, Nokia and Sony competing and dominating the industry.
The bargaining power of suppliers is medium because mobile phone manufacturers rely on their key suppliers for quality component parts at competitive prices and the operating system such as android is open source. Customers have major brand choices and don’t mind paying higher prices, for the latest smart phones and mobile phones. The bargaining power of buyers could be rated as medium, with a wide variety of mobile phones available. The threat of substitutes could be described as low, due to the added functionality that smart phones and mobile phones have over single featured technology products such as digital cameras.
The threat of new entrants is seen as low, because the technology investment needed to compete in this fast moving industry is high. If we look at the mobile phone industry worldwide, the five forces could be rated as follows.
The main purpose of Porters Five Forces is to find a position in an industry where a company can defend itself against competitive forces or it can influence them in its favour.Ī strategist can analyse, any market by rating each competitive force as high, medium, low in strength and rate as follows. In 1979, Harvard Business Review published How Competitive Forces Shape Strategy by a young economist and associate professor, Michael E. Porter’s Five Forces Model – Example: Mobile Phone Industry